"People worry about inflation in an anticipatory kind of way, but we think the ECB is probably closer to tightening as they are unhappy with the German union deals," said Richard Koss, global bond portfolio manager at Brown Brothers Harriman.
At the same time, though, he
expects the European Central Bank
to hold off a little longer too.He
noted that with several high profile elections coming up, the time may not be right to raise European rates.This belief prompted some to buy more European bonds as well.
Investors that stick to U.S. fixed-income
markets also boosted their holding of U.S. Treasuries to 21 percent from 20 percent while they again cut holdings of U.S. corporate debt to 34.8 percent from 38 percent in April and from 48 percent in March.
Investors said there were still ongoing worries about the fallout from a growing accounting scandal.